In a ground breaking win for property developers, a recent NSW Court of Appeal decision found that land held for future development but used for grazing, can be exempt from land tax.
The Court of Appeal’s recent decision in CCSR v Metricon QLD Pty Ltd (2016) affirmed the position that property developers are entitled to rely on the exemption described in s10AA of the Land Tax Assessment Act (1956) if the land is being used for primary production.
The primary production exemption requires the dominant use of the land to be for primary production. The Office of State Revenue (OSR) has increasingly refused claims for the primary production land tax exemption, for property which actually is used for primary production, where the land is also held for future development. The OSR’s position is based on a view that the exemption does not apply because the ‘dominant use’ of such land is for ‘land banking’ or ‘land development’, not for primary production.
We recommend that property developers with primary production land review their current land tax bills, particularly if the exemption has been previously refused by the OSR on the grounds that the dominant use of the land is not primary production.
This also clears the way for the acquisition or continued holding of farm land with a view for future development without the significant holding costs associated with land tax (subject to meeting the tests for primary production use).